Canaan Q2 earnings surge amid volatile digital currency market
Canaan Inc. (NASDAQ: CAN), a Beijing-based hardware manufacturer of digital currency mining equipment, reported a record second-quarter FY21 revenue growth of 507.3% year-on-year to $167.5 million.
The NASDAQ-listed company said in a quarterly earnings report that it sold 5.9 million terahashes per second (TH/s) of hashing power during the quarter representing a 126.9% Y/Y increase from 2.6 million TH/s. That amount of hash rate accounts for about 4% of the BTC network’s total current hashing power.
Canaan’s Chairman and CEO Nangeng Zhang commented, “We delivered a remarkable performance in the second quarter of 2021. Despite unexpected regulatory policy dynamics and Bitcoin price volatility, we achieved record-high topline results as we delivered a robust 5.9 million Thash/s of computing power to our clients.”
The company’s better-than-expected Q2 net revenue marked the strongest quarterly sales in Canaan’s operating history, up 507.3% from ~$27 million in the same period of 2020 and 168.6% from ~$61.5 million during the first quarter of 2021.
Canaan’s gross profit was $66.2 million, up 887.0% from ~$6.1 million in the same period of 2020 and 119.9% from ~$29.6 million during the first quarter of 2021.
The company reported that net income came out at $37.9 million, “marking the highest quarterly net profit since the Company’s initial public offering in 2019”. This result compares to a net loss of $2.4 million in the same period of 2020.
James Cheng, CFO of Canaan, stated, “We reported solid financial results for the quarter. Besides the record-setting revenue of RMB1.08 billion and a non-GAAP net profit of RMB320.1 million, our vigorous book of preorders, primarily from overseas clients, have brought abundant prepayments, which further enhanced our cash position.”
As of June 30, 2021, the company had cash and cash equivalents of $189.0 million and $161 million worth of contract liabilities for equipment preorders that are still to be delivered in the coming quarters.
Investors should be mindful that the outlook for the volatile block reward mining industry does have a material impact on the performance of Canaan’s stock. The firm offered vague upbeat guidance in the report stating it expects its total revenues for the third quarter to “have a sequential increase of 10% to 30%.”
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